TABLE OF CONTENTS

• I. Executive Summary
• II. Introduction
• III. Sales Tax
• IV. Accountability
• V. Demand
• VI. Regional Tax Capacity
• VII. Congestion
• VIII. County Policy
• IX> Conclusion

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Guide to Transit Now
A proposed sales tax increase to fund additional King County public transit services

by Michael Ennis
Director, Center for Transportation
September 2006

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I. Executive Summary

With the array of transportation ballot measures in recent years, voters are exercising unprecedented influence over how their tax dollars are being used.

In yet another proposal, King County Executive Ron Sims is proposing Transit Now, a ballot measure which would raise the County sales tax by 0.1% and use the new revenue to expand transit services.  The package would increase tax revenues by an estimated $50 million annually by 2008, and by about $75 million a year by 2016.  The new tax has no expiration date.  The size of Metro would be permanently expanded by about 20%.

The County would use the new funding to purchase 175 more buses over the next four years.  County officials say the new buses would add 700,000 new service hours, particularly in growing communities, and add Bus Rapid Transit (BRT) on five corridors in Seattle, East and South King County.

The proposal will appear on this November’s ballot.  The findings of this study reveal several key points about what this proposal would mean for the people of King County.

Ridership and population trends point to higher demand for Metro transit, but the rate of the proposed sales tax growth will rise much faster than passenger demand.

While population growth will lead to a modest rise in ridership, the overall market share of public transportation will probably not change.  Historical trends demonstrate that simply adding more buses does not trigger an increase in the share of daily riders using public transportation.

King County would collect the higher sales tax indefinitely.  Under Transit Now, the County sales tax revenues would pass the $1 billion mark by 2025.  Presently, sales tax revenue is $355 million a year.

The new buses would not be delivered until 2009.  Taxpayers would pay the higher sales tax for two years before they would receive any substantial service increases.

When the last sales tax increase passed in 2000, Metro promised over 500,000 hours of new service.  Since then, Metro has only delivered 203,000 hours of new service.

Despite years of spending growth, the share of commuters using public transit has remained unchanged for 26 years.  Past experience shows that adding more buses does not increase public transit’s overall share of passenger demand.

Adding the recent gas tax increases with several pending transportation proposals, including Transit Now, a Seattle resident is facing an additional $600 per year for transportation related projects, compared to just a few years ago.

Approving the measure will maximize King County’s current sales tax authority and eliminate an important future budget tool for policymakers.

The Transit Now proposal could have a significant impact on long-term transportation planning.  The proposal should be viewed in the context of a larger regional funding package being planned for 2007.  Understanding how Transit Now fits into the region’s broader transportation needs will help citizens and public officials avoid costly mistakes and lead to better decisions.

II. Introduction

King County Metro maintains a fleet of about 1,400 fixed route vehicles with approximately 2,700 drivers.  The agency has a total workforce of 3,670 and an annual budget of more than $540 million.  It covers a service area of nearly 1.8 million residents by providing 273 bus routes, plus van pool services, ridesharing and park and ride lots.[1]

After voters approved Initiative 695 in 1999 and thus reduced the Motor Vehicle Excise Tax, which had provided about a third of Metro’s budget, the legislature granted counties an additional 0.3% in sales tax authority.  This gave Metro a total of 0.9% in sales tax authority.  In 2000, King County won approval from voters to increase the sales tax by a further 0.2%, leaving 0.1% in additional taxing capacity.

Figure 1 – Sales Tax History of King County Metro[2]

1972	0.3%
1980	0.6%
2000	0.8%
2006 (proposed)	0.9%

In April 2006, King County Executive Ron Sims proposed Transit Now, which seeks to use the remaining 0.1% sales tax and permanently expand King County Metro by 20%. The package would generate an estimated $50 million in new annual revenues for Metro. This translates to an additional $25 in the first year in additional sales tax for the average consumer.[3]  If approved, the proposal would increase the total sales tax in King County from 8.8% to 8.9%.

The County would use the new funding to purchase 175 new hybrid diesel-electric and standard diesel buses over four years, beginning in 2009.  With a total cost of $125 million, the hybrid diesel-electric buses cost approximately twice as much as standard diesel buses.  The new buses would be used to increase the capacity of available transit service on several routes, add new service in growing neighborhoods, and add Bus Rapid Transit on five corridors in Seattle, East and South King County.[4]

In a separate proposal, Metro wants to increase bus fares by 75 cents over the next 10 years.  The County estimates the new fares would add an average of $21.6 million in new annual revenue by 2011.[5]

In September, the King County Council placed the Transit Now proposal on the November ballot.[6] The ballot summary reads:

“The Metropolitan King County Council has passed Ordinance No. 2006-0285 concerning this public transportation system sales and use tax proposition.  This proposition would authorize King County to fix and impose an additional sales and use tax of one-tenth of one percent in order to fund expansion of service, operations, maintenance, and capital needs of King County Metro public transportation, including, but not limited to, expanded bus service, accessible services, vanpool programs, passenger facilities, park and ride facilities, and other congestion relief projects to preserve and enhance Metro Transit services as provided in Ordinance No . 2006-0285.  Should this proposition be enacted into law?”[7]

In 2000, Metro’s last sales tax increase added about $80 million a year in additional revenue.  Since then the agency has added nearly 200,000 hours of bus service and purchased 244 new buses.

The higher sales tax proposed by Transit Now, combined with the planned fare increases, would raise Metro’s budget by an estimated $294 million over the first five years, or an average of $59 million a year.  That represents an 11% rise in annual spending compared to Metro’s 2004 totals.  To put this level of increase in perspective, Metro’s operating expenses in recent years has grown an average of 4% a year. 

In arguing the need for the new revenue proposed under Transit Now, King County officials make three main claims:

Increasing transit service will trigger an increase in riders.

Increasing revenues will translate into increases in service delivery.

ncreasing spending on transit will relieve traffic congestion.

Claim: “Existing regional, county and local government transportation plans call for Metro to carry a growing proportion of trips to support the county’s mobility, economy, and quality of life.”[8]

The proportion of daily travelers in King County using public transportation has remained static for 26 years.  Despite sharp growth in the county’s transit spending, historical data indicate that adding more buses does not translate into a greater share of daily riders using public transit.

Claim: “The ordinance will allow Metro to increase bus service an estimated 15 percent to 20 percent systemwide over the next ten years.”[9]

Metro’s past predictions of increased service in return for higher taxes have not come true.  In 2000, County officials promised voters 575,000 hours of new bus service in exchange for a 0.2% increase in the sales tax.  Metro has only delivered 203,006 hours of new service.  Under Transit Now, compared with the 2000 proposal, Metro says it will provide three times more service for half as much money.

Claim: “The initiative is intended to get 50,000 to 60,000 drivers off the road and into buses each weekday to keep regional congestion in check. And, the initiative provides traffic relief to commuters who will be affected by construction of highways and other transportation projects.”[10]

Comparing population trends with projected growth reveals Metro’s ridership will only increase between 10,000 to 15,000 riders over the next five years. This is far short of Transit Now’s prediction of 50,000 to 60,000 riders.  Adding 175 more buses will do little to relieve traffic congestion.  Between 1996 and 2004, Metro added 353 buses, yet average vehicle delay and commuter times increased. 

Claim: “‘We asked people what they wanted and they said they want more transit now,’ said King County Executive Ron Sims. ‘Unlike major construction projects, we can begin adding new bus service within months of voter approval.’”[11]

According to Metro, 100 new hybrid diesel-electric buses are not planned for delivery until at least 2009.  The remaining 75 standard diesel buses would not be delivered until 2012.  Under Transit Now, consumers will pay higher sales taxes for two years before they see any substantial increase in service.

III. Sales Tax

King County relies heavily on the sales tax to fund public transportation. In 2004, sales taxes accounted for 61% of transit funding, while actual riders only contributed 14% through the farebox.[12]  Capital grants, interest income and Sound Transit taxes account the remainder of transit funding.

There are three main criticisms of using a tax on consumer goods to fund transit services:

It is regressive;

The tax continues even if ridership declines; and,

100% of the population pays for most of a service that only about 10% use.

Relying on a regressive tax assigns a larger share of the tax burden to lower income citizens.  As a person’s income decreases, the proportion spent on consumable goods increases.  In other words, King County is asking poorer residents to spend a larger share of their income on public transportation than mid to higher level income citizens.

The 0.1% sales tax increase would generate about $50 million in additional sales tax revenue by 2008.  After the initial bus purchase, the county would continue to collect the tax, indefinitely.  By 2025, the county could be collecting more than $1 billion in total sales tax revenues per year.[13]

Comparing Metro’s pace of sales tax growth with the rate of projected ridership reveals a disproportionably higher rate of spending.  The following chart compares sales tax revenue with and without the change proposed by Transit Now.  It illustrates the growing divergence between sharply rising sales tax collections and the relatively flat projected demand for bus service between 2005 and 2025.

Figure 2 – Comparison Between Ridership,[14] and Sales Tax Revenue[15]
(Number of passenger trips in millions, and dollars in millions)

While ridership is expected to climb, its projected pace is far below the rate of sales tax growth.  Under Transit Now, sales tax revenue would climb by 68% over 20 years, while ridership would increase less than 28%.

County officials estimate the sales tax increase from Transit Now would cost the average consumer $25 in the first year.  Assuming an inflationary 3% annual increase in the added sales tax burden for an average consumer, that $25 would rise to $45 a year by 2025.

In addition, the 0.1% increase would maximize Metro’s sales tax authority.  Reaching the sales tax lid removes the county’s ability to use new sales tax revenue for future projects.

IV. Accountability 

In 2000, County officials told voters the proposed 0.2% tax increase would buy, among other programs, 575,000 hours of new bus service over the next six years and maintain services affected by the Initiative 695 car tab measure.[16]  The tax was approved, but over the next six years, Metro added only 203,006 hours of new bus service; less than half of what county officials said they would provide.[17]

In comparison, the Transit Now proposal says the new 0.1% sales tax increase will result in 700,000 new hours of bus service within 10 years.  It is difficult to accept this estimate, when the 0.2% increase in 2000 translated into only 203,000 hours of new service.  Under Transit Now, Metro is saying it would provide three times more service with half as much money.

Further, the Transit Now proposal tells voters that one of its advantages is travelers will benefit from increased service within “months of voter approval.”[18]  The very name of the proposal, Transit Now, suggests an immediate increase in bus service.

However, according to Metro, the first delivery of new buses is not scheduled for two years after the sales tax is implemented.  The first 100 hybrid diesel-electric buses would cost about $90 million and are not scheduled for delivery until 2009.  The remaining 75 buses are standard diesel models and would not be delivered until 2012.

Comparing the expected new revenues under Transit Now between 2007 and 2009 with the cost of the first 100 buses reveals that a majority of the increased sales tax will be dedicated to the procurement of buses.  Therefore, taxpayers will be paying the higher sales tax for at least two years before any substantial service increases.

V. Demand

Ridership on public transportation is highly correlated to population trends, and both are important factors in estimating passenger demand.  Under Transit Now, King County officials estimate ridership would increase by 21 million more boardings by 2017.[19]

Based on recent trends, this estimate of new ridership seems optimistic at best.  The rate of unlinked passenger trips for King County Metro increased from 83.6 million trips in 1996 to 98 million trips in 2004, or by 14.4 million trips in nine years.[20]  The average annual increase during those nine years was about 1.8 million trips per year.  If Metro is able to maintain a similar rate of growth, ridership would increase by only 18.5 million trips by 2017.

Even more pessimistic is the Washington State Department of Transportation’s (WSDOT) estimate that passenger trips for bus services in King County will only increase by a mere 26,500 trips by 2010.[21]  While still projecting growth, WSDOT predicts that passenger trip demand will increase by only 2.5% over the next four years.

In another measure, the population of King County is rising by an average of about 21,000 per year.[22]  In the unlikely event that all of these new residents commute daily, and assuming the share of public transportation still accounts for 10% of commuters, the net increase for Metro would be an estimated 10,000 new riders a year, far short of that projected by Transit Now.

On the other hand, King County estimates 150,000 new residents will move into the county in the next ten years.[23]  Under this estimate, and making the same assumptions about commuting, the net increase for Metro ridership between 2006 and 2016 would be only 15,000 new riders.

Regardless of which estimates are used, however, likely future ridership volumes fall well short of Metro’s optimistic projection of what ridership would be under Transit Now.

Presumably, the remaining daily trips are attributed to the addition of 175 new buses.  But simply adding more buses does not trigger higher ridership.  Transit Now argues that new buses will attract new riders.  The ordinance passed by the King County Council makes this point:

“Imposing an additional sales and use tax of one-tenth of one percent in the county will allow Metro transit to...attract additional riders to the public transportation system.”[24]

This policy approach is based on the assumption that “if you build it, they will come.”  Yet, while the population in King County continues to grow, the share of daily travelers using public transportation does not.

The following table compares the percentage of King County commuters who travel by private passenger vehicle and public transportation, since 1980.

Figure 3 – Percentage of Daily Commuter Trips in King County by Method of Travel, 1980 to 2003[25]

	1980	1990	2000	2003
Passenger Car	81%	82%	81%	79%
Public Transportation	10%	09%	10%	10%
Other	09%	09%	09%	11%

While population growth is consistent with a prediction of a modest rise in ridership, the overall market share of public transportation will probably not change.  Historical trends demonstrate that simply adding more buses does not trigger an increase in the share of daily riders using public transportation.

VI. Regional Tax Capacity

The Transit Now proposal follows a statewide debate over funding for transportation improvements.  In recent years state lawmakers have adopted a series of gas tax increases.  Sound Transit and the defunct Seattle Monorail represent major spending programs.  And over the next two years King County voters will likely face several transportation packages.  These include:

A $365 million special levy for street repairs in Seattle, also on this November’s ballot.

An estimated $7.2 billion for the Regional Transportation Investment District (RTID) in King, Pierce and Snohomish Counties.

Possible additional funding for major projects, like replacing the Alaskan Way Viaduct in Seattle, replacing the 520 bridge across Lake Washington, expanding I-405 capacity in the Bellevue – Redmond area, in case RTID funding is not sufficient.

A new phase of the Sound Transit Light Rail project.

If these proposals are enacted, the average person who owns a home and car in Seattle would pay about $306 more a year for transportation spending in 2008.  If total state and federal gas taxes are included, the same consumer would pay almost $600 in additional transportation related taxes.  The following table shows the average amount a King County resident would pay in 2008 from each measure.

Figure 4 – Increase in Average Consumer Transportation Related Taxes, 2006 to 2008[26]

Current and Proposed Taxes	Cost to Consumer Pey Year
Transit Now	$25
City of Seattle*	$145
RTID	$107
Federal Gas Tax	$100
State Gas Tax	$221
Total	$598

These tax burden amounts do not include the $4.7 billion for the first phase of Sound Transit, the failed Seattle Monorail, or the 11 special levies and bonds currently in force in King County.  Furthermore, these amounts are on top of the current heavy burden of sales, property, and business and occupation taxes.

VII. Congestion

Despite years of increasing spending on public transit systems, traffic congestion in the Puget Sound region continues to worsen.

Metro added 353 buses between 1996 and 2004.[27]  Yet, according to the Puget Sound Regional Council (PSRC), the average commute time in King County rose from 24.2 minutes in 1990 to 26.5 minutes in 2000.[28]

A common measure of congestion used by the Texas Transportation Institute also reveals growing slowdowns on Seattle’s roadways.  The Travel Time Index (TTI) shows steadily climbing commute times for Seattle drivers.  In 1993, congestion would have added an average of seven minutes to a trip.  Ten years later, the TTI reported an average seven-and-a-half minute delay due to increased congestion.   Currently, traffic congestion adds roughly 46 hours a year to travel times.

What is important is not the rate of increase in the TTI, but the fact that Metro added 353 buses and daily traffic delays continued to climb.  The data are one indication that public transit does not reduce congestion or improve trip times.

Furthermore, WSDOT predicts that total hours of vehicle delay in the state will rise dramatically in the next twenty years.  The table below illustrates that despite a 90% increase in transit service hours, delay will rise nearly 300%.

Figure 5 – System Wide Summary of Travel Forecasts[29]

	1998	2025 Baseline	Change 1998-2025
Daily Total Person Trips	12,081,600	17,902,400	+48%
Daily Total Vehicle Trips	8,545,600	12,382,700	+45%
Total Daily Vehicle Miles Traveled (VMT)	72,883,900	109,061,300	+50%
Lane Miles (Fwy and Expressways)	2,320	2,360	+2%
Lane Miles (All Other Facilities)	9,940	9,980	0%
Daily Transit Service Hours	13,100	24,900	+90%
Total Daily Vehicle Hours of Delay	285,500	1,118,400	+292%
Daily Commercial Vehicle Hours of Delay	33,800	137,400	+307%

VIII. County Policy

Historically, south and eastside areas such as Kent, Auburn, Federal Way, Issaquah, Sammamish and Redmond did not have the populations to justify increased transit service.  Therefore, Metro dedicated most of its services to the higher density areas like downtown Seattle.

To reach underserved and rapidly growing suburban communities, King County officials in 2002 implemented a spending policy called 40-40-20, which defines how new service hours are distributed.[30]  For every 200,000 hours of new bus service, the County directed Metro to allocate 40% to South King County, 40% to East King County and 20% to Seattle.  The 40-40-20 policy applies to the new service hours that would be created by Transit Now.[31]

But why would a Seattle resident support a tax plan under which the city would only receive 20% of the new service?

Transit Now includes a provision called “Service Partnerships,” which sets aside a certain amount of new bus service hours for major employers and cities, outside the limits of the 40-40-20 policy.

Under Transit Now, Metro estimates that 90,000 new bus hours over ten years, out of the 700,000 new hours planned, will be reserved for Service Partnerships, thus circumventing 40-40-20 limitations.  This will significantly reduce the pool of new service hours available to growing and underserved regions of the county like the South and Eastside.  In effect, Metro gains support in Seattle by siphoning service hours from the suburban regions.

IX. Conclusion

King County officials say the public transit system needs to expand in order to keep pace with projected growth.  The new sales tax proposed under Transit Now, plus a proposed series of fare hikes, is supposed to meet this growth.

Yet the data shows that Transit Now will not reduce traffic congestion in King County and that spending more on buses will not increase public transit’s share of daily ridership.  The proposal raises taxes at least two years before there is any substantial improvement in service, and more than half of the new buses will be expensive hybrid versions, which cost twice as much as standard buses.

Also, like Sound Transit and the Seattle Monorail, past promises by Metro officials about improvements in service have not come true.  Given this experience, it is unlikely the new services offered to the public under the Transit Now tax increase will be delivered as promised.

The Transit Now proposal does include an element of Bus Rapid Transit, which in other cities has shown promise for improving public transit.  Buses operating in a dedicated travel lane provide frequent, flexible and high quality service at much less capital cost than building fixed light rail.  BRT service also creates less impact on the environment, less disruption to neighborhoods and functions at significantly lower operating cost than light rail.

Washington’s planned spending on transportation is taking a toll on the tolerance of taxpayers and the capacity of their disposable income.  In the past, policymakers recognized the public’s willingness to approve new funding for targeted purposes and responded by proposing major budget items as special ballot measures.  Over time, however, the cumulative tax burden imposes severe strain on the citizens and economy of the region.  Voters need to consider how various new taxes add up as they decide which measures will best serve their financial and transportation needs.

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